Rachel Avery, accounting clerk in the personnel office of Clarence G. Avery Corp., has begun to compute pension expense for 2004 but is not sure whether or not she should include the amortization of unrecognized gains/losses. She is currently working with the following beginning-of-the-year present values for the projected benefit obligation and market-related values for the pension plan:

Projected Benefit Obligation Plan Assets Value
2001 ,200,000 $1,900,000

2002 ,400,000 2,600,000
2003 ,900,000 2,600,000
20043,900,000 3,000,000

The average remaining service life per employee in 2001 and 2002 is 10 years and in2003 and 2004 is 12 years. The unrecognized net gain or loss that occurred during each year is as follows.

2001 $280,000 loss
2002 90,000 loss
2003 12,000 loss
2004 25,000 gain

(In working the solution, you must aggregate the unrecognized gains and losses to arrive at year-end balances.)

Instructions

You are the manager in charge of accounting. Write a memo to Rachel Avery, explaining why in some years she must amortize some of the unrecognized net gains and losses and in other years she does not need to. In order to explain this situation fully, you must compute the amount of unrecognized net gain or loss that is amortized and charged to pension expense in each of the 4 years listed above. Include an appropriate amortization schedule, referring to it whenever necessary.